Outlook

Asbestos sales early in 1983
are comparable with results ob-
tained for the similar period in
1982. Increased demand in
Europe and the U.S.A. for
asbestos cement fibres is ex-
pected as construction activity
improves in those areas, but is
likely to be offset by the
depressed conditions which
continue to prevail in the con-
struction industry in most
developing countries. The
market for spinning fibres con-
tinues buoyant and it is ex-
pected that overall sales of
Cassiar asbestos fibre will ap-
proximate levels achieved in
1982. Due to further im-
provements at the mine,
operating costs are expected to
remain at 1982 levels and the
mine should therefore generate
a modest contribution to cash
flow.

Although the life of the present
Cassiar pit has been shortened
as a consequence of
recalculated ore reserves, the
amount of development waste
to be removed has also been
reduced substantially, and this
should result in a higher than
normal operating cash flow in
the last few years of the present
open pit operations. The addi-
tional asbestos resources which
have been identified in the
vicinity of the Cassiar mine will
continue to be evaluated for
future operations as the present
open pit reserves are depleted.

The Loftis mine is expected to
make modest contributions to
cash flow when demand and
price in the eastern United
States for thermal coal return to
normal levels. Although thermal
coal markets in Pacific Rim
countries are also depressed at
this time, the Quinsam property,
close to tidewater on Vancouver
Island, is attractively situated for
coal deliveries to such markets
when conditions improve. Ap-
proval in principle from the
Government of British Columbia
to proceed with the Quinsam
project is a major step in the
development of this property.

The policy of spending a por-
tion of Brinco Oil & Gas
Limited's cash flow on low risk
development activities on its
substantial land position will
continue. Contributions to cash
flow from this subsidiary are
also expected to continue. Part-
ners at both the project level
and the corporate level will be
sought to further the growth of
Brinco Oil & Gas Limited, while
ensuring continuation of its
status as a healthy participant in
the oil and gas industry.

Exploration and project activity
expenditures will be further
reduced in 1983 and will con-
centrate on those activities
which have the potential of im-
proving or extending existing
reserves, particularly those of
Cassiar.

In summary, the recovery in
markets served by the Com-
pany’s operations is likely to be
slow and operating results for
1983 are expected to be similar
to those for 1982. While cash
flow will remain under pressure
in the current year, this pressure
has been significantly reduced,
compared to 1982, due to
reduction in costs at the cor-
porate, project and exploration
levels and closure of the San
Antonio mine. Nevertheless, a
significant improvement in the
construction and building in-
dustries served by Cassiar’s high
quality asbestos production is
required to provide the earnings
and cash flow necessary to
enable the Company to resume
payment of dividends on its
preferred shares.

The circumstances experienced
in 1982, dictate the need to re-
negotiate the terms of out-
standing bank loans in Brinco
Mining Limited and discussions
to that end with that subsidiary’s
bankers are in progress at the
present time.

Although Brinco’s growth as an
operating resource development
company received a severe set-
back as a result of the events of
1982, it should be noted that
the Cassiar mine, operating in
extremely difficult market condi-
tions, was nevertheless able to
make a modest contribution to
cash flow, and a significant
upturn in asbestos markets could
very substantially improve future
operating results.

Acknowledgements

To all Brinco’s employees who
have cooperated in attempting
to reduce costs and improve ef-
ficiency, we would like to extend
our thanks and those of the
Board of Directors.

All those who are associated
with the Brinco Group were sad-
dened by the death of the Chair-
man, Mr. Robert B. Dale-Harris
in December. His good humour,
intelligence and even temper
were wonderful antidotes in the
difficult circumstances which
prevailed in 1982. The Board of
Directors has elected Mr. Harry
W. Macdonell QC. a former
President and longtime Director
of Brinco Limited, to succeed
Mr. Dale-Harris as Chairman of
the Company.

MM Yee mee

Harry W. Macdonell
CHAIRMAN

We A, S

Hugh R. Snyder
PRESIDENT AND
CHIEF EXECUTIVE OFFICER

April 29, 1983

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